In 2010, President Barack Obama announced that he would begin implementing the largest, most comprehensive, and possibly the most controversial reform of the United States healthcare system in the past decade. Dubbed the Affordable Care Act, or “Obamacare” as it has become known, this new piece of legislation seeks to reduce the number of uninsured citizens in the United States by mandating that all people have access to healthcare and are required to purchase it (Gruber, 2010). It also seeks to lower Medicare spending costs through a verity of new taxes. The hope is that the new bill will help the 32 million current Americans that are uninsured, and will hopefully raise revenue for the government to begin reducing the overall deficit (Gruber, 2010). In this short paper, we will first take a look at the current/past system, and identify some of the main reasons for the proposed changed, next we will look into the specifics of the Affordable Care Act and how the government plans on financing the new project, then we will analyze the economic effects of the act, both long and short term, and finally we will assess how the new act will affect the people and companies in the United States.
II. The Past System
After his inauguration in 2009, President Barack Obama vowed that one of the first items on his political agenda was a massive and comprehensive reform of the current healthcare system in the United States. Healthcare accounts for almost 17% of the total gross domestic product in the United States, and is expected to keep growing (Gruber, 2010). Before the act was signed in, the main source of insurance for healthcare coverage is employer-sponsored insurance plans (ESI). This was completely optional for the companies, but they were incentivized by the US government through the use of a large tax subsidy to those who participated (Gruber, 2010). The United States also employed the use of Medicare and Medicaid to help those who may have difficulty paying for healthcare coverage. Unfortunately, Medicare only covers elderly Americans, and the standards for qualifying for Medicaid were so high that many just outside of the standard, but were still making near-poverty wages, were left without healthcare coverage from their current employer. As of 2010, approximately 32 million people in the US were classified as uninsured for various reasons, ranging from lack of employment sponsored healthcare, to the inability to qualify for healthcare due to pre-existing conditions that disqualified them from purchasing health insurance from insurance providers. In lamen’s terms, many people were left to their own devices in terms of financing their own healthcare.
III. Overview of The Affordable Care Act
In 2010, the Patient Protection Act also known as the Affordable Care Act was signed into law, and began implementing changes to the healthcare system over the next 10 years (Gruber, 2010). Because the ACA is a very...